Used Marketplace Review
While April is punctuated with the first of the year’s holiday seasons, it has still been a great selling month for XBG and our clients. Usually school and public holidays herald a flurry of sun seeking getaways and most often a dip in Trade buying. This year the general shortage in stock from some many auction vendors has kept the market very busy and remarkably stable.
Although the turmoil created by current US leadership decisions shouldn’t logically directly effect our market area, it’s certain that any economic headwinds reaching our shores eventually will. This usually emerges as a lack of confidence in lower level financial decision making, which undermines the used vehicle market and can be illogically infectious. At XBG we continue to create new interest in stock, and develop fresh sales sections at alternative auction locations in the knowledge that the current active market may not be there in the longer term.
UK CV Show – NEC Birmingham
At this time of year no self-respecting Commercial Vehicle aficionado would miss the annual CV Show. While the number of manufacturers exhibiting has shrunk considerably in recent years, it is still a great chance to get one-stop insights into everything from commercial body builders or racking and storage systems, through to new vehicle sourcing.
While the manufacturer representation is usually dominated by Ford’s colossal stand, amply demonstrating their position in holding around a third of the new UK LCV market, there are other things to look at. This year an area of significant interest is the Flexis brand launch.
A collaboration between Renault and Volvo, and unsurprisingly only available with EV powertrains, there is nothing new about launching a range of cars built off of one battery ‘skateboard’, but it is new to the van world and one particular version certainly breaks the mould. We had the privilege of visiting the Flexis development centre in France a couple of years ago when the range was still under embargo and the then secret Flexis Step-In-Van was causing quite a stir.
Aimed squarely at the huge urban multi-drop delivery market, the Step-In-Van has some great innovations. As well as an infinitely programmable integrated routing and navigation system, there are a host of driver focused elements. The sliding cab door can be configured to open automatically as the vehicle comes to a stop, as can the access door from the cab to the load area, and as the driver leaves the van these doors will close automatically too. Rear load area access for larger items is via a fast electric roller shutter, designed for both ultimate convenience and security.
The narrow use case for this sort of vehicle does present a challenge where residual values are concerned, but Flexis have considered this, and have built the van with an intended longer than average life-cycle. This makes longer term funding arrangements possible, and limits the negative impact that risk averse residual values have on traditional 3-5 year funding arrangements. There was even talk of pence-per-mile funding possibilities as seen in the London Taxi market which would certainly be a new dimension in the van world.
LCV Market
With the wholesale van market still in good health, and not seeing much change from last month, it’s worth taking some time to look at some underlying statistics that will continue to affect values.
Having already mentioned the relatively short supply of stock into auctions its clear that the stock that is available is increasingly tired, and with high mileage. Last month we saw a notable increase in non-running vehicles, or those vans deemed beyond economical repair for various reasons. Uptake has been good up until now with Trade willing to speculate on the possibilities of making some extra money by taking on someone else’s problem, but there are signs of this waning a little. The average age and mileage of a van in auction is now 71 months and 79,000 miles, so it is no surprise that the number of ‘problem’ vehicles is growing. Incredibly 85% of vans in Manheim auctions in the first quarter carried an average mileage of 114,000 !
It has long been reported that a two tier market has been emerging, and this is now definitely the case. With only 15% of auction entries now being under 3 years and 60,000 miles, these vans in clean condition will consistently make a premium over guide values, while the older higher mileage versions sit behind guide figures by varying degrees.
Car Market
The used car market is not as good as the van market, and although the balance of supply and demand is reported as okay, it’s evident that the many challenges in the emotionally charged world of car retailing are slowing things down. The thin line of Retail profitability balanced against increasing costs, and the often fickle nature of the now internet savvy stream of customers, presents a challenging arena.
Fuel choice is now a big consideration for dealers stocking their used car forecourts. A well-priced electric car is now one of the quickest moving pieces of stock statistically, most often selling to an online buyer. But traditional walk-in or local customers are still sceptical, leading to nervousness amongst Sales Managers when choosing what to spend their stocking funds on. Incidentally Autotrader reported their first (now benchmark) Tesla Model 3 being advertised at under £10,000 during April, demonstrating how quickly this once aspirational model has quickly turned into the mass market modern day Ford Focus of the fleet world. This was in fairness, always Elon Musk’s intention.
There is some evidence of the growth in dealers and specialist suppliers being more successful than ever in shopping to order. This low risk strategy of linking customers to specific cars by using online images and condition reports directly from auction platforms, does have its benefits. But the process can be arduous, and depends on good access to the myriad of auction websites, and of course the images and condition being presentable enough to elicit a deposit from an interested customer.
Trucks and Trailers
The good news in the truck sector continues this month, with some very healthy sales being reported around the country. Whilst there remains plenty of stock available, fresh stock has slowed down of late, meaning the trade have to choose from what is available. But that has not dampened demand, it remains strong with some good prices being paid at auction.
Older trucks, usually Euro 5 and earlier are now really selling for parting out or export, there is not a lot of home market left for these now. Unless of course they are different from the norm, such as this MAN Grab 6×4 Chassis, which although being 16 years old sold well for export. A double drive chassis always attracts interest, no matter what age.
In detail, the Box and Fridge sector remains busy, with plenty of stock for the trade to choose from. As a consequence only the cleanest examples are selling for strong money, but trucks with greater damage or non-running are selling for way behind Book or market value. But a clean low mileage Euro 6 Box at any age is proving popular currently.
It is the same story for Dropsides where the cleaner stock is selling okay. Tippers on the other hand have become somewhat scarce, with prices now rising slowly in this sector.
A good number of Tractor units have appeared this month, clearly from a supermarket contract. With many of them being 4×2 examples, prices have hardened here to the extent that any that are in below-par condition results in the trucks not selling at all. This is always the case when a large contract ends, resulting in volumes of similar trucks entering the markets, this will always depress prices.
6×2 Units are also readily available, from early Euro 6 through to later low mileage examples. Most are finding homes quite easily, as long as prices are reasonable. However, any non-runners are really struggling to make any decent money.
The truck trade is very healthy at the moment subject to all of the usual caveats. If the vehicle is more or less ready to retail then good prices are being achieved at auction. Any below-par condition trucks are having to wait for a buyer though.
RCV’s are still selling this month, as long as price expectations are sensible. As usual Euro 6 examples can sell for further work, anything older sells for parting out. 4×2 RCV’s on standard truck chassis always sell well though, such is the rarity of these trucks.
Plant and Equipment
Plant and Equipment sales remain steady this month, although there are now some concerns amongst Buyers about how a possible world recession will affect export markets.
This will particularly affect the larger items of machinery, such as Excavators, Cranes etc. They will still sell but, the exporters will need to account for increased shipping costs and fluctuations in the exchange rates, especially against the Dollar.
Whilst the current ‘tit for tat’ international Trade Tariffs being applied seem to be affecting just new products, there is some uncertainty amongst the Buyers if there will be any further oncosts for exporting used equipment.
Smaller plant items are less affected as most of these sell to the home markets without such concerns, and with the resultant positive auction results. In all cases, stock direct from the Utility fleets remain very popular at auctions, with plenty of interest shown in anything that is offered!